Federal Trade Commission shuts down work-from-home companies

More than 90 work from home companies have been shut down by the FTC for fraudulent practices. Image: Flickr / gpaumier / CC-BY-SA

The Federal Trade Commission and Department of Justice have teamed up to shut down more than 90 companies. These work-at-home companies allegedly defrauded customers out of millions of dollars. Most of these companies also targeted unemployed individuals with their work-at-home promises.

Work-at-home businesses targeted

In a joint action, the Federal Trade Commission and and Department of Justice sent shutdown notices and froze the assets of a variety of work-at-home marketing companies operating in the United States. These shutdowns were a part of Operation Empty Promises, an enforcement effort that has resulted in dozens of criminal counts being filed federally, on the state level and locally. The allegation is that these businesses defrauded customers, promising huge work-at-home profits with very little work for a small investment. The largest businesses shut down include:

Ivy Capital

Darling Angel Pin Creations Inc.

Global U.S. Resources

U.S. Work Alliance Inc.

Preferred Platinum Services Network

Abili-Staff Ltd.

Entertainment Work Inc.

La Asociacion Nacional de Trabajo

The cost of business fraud

The individuals targeted by these allegedly fraudulent businesses have lost significant amounts of money. In general, these companies used telemarketers to call unemployed individuals and offer webinars and classes on “how to start your own business.” The price of these webinars varied from $2,000 to $30,000. In several cases, the telemarketers would find out what kind of credit limit the customers had on their cards and then charge close to that amount. When refunds were requested, the companies would not respond, or would offer only a few hundred dollars. Just one of the 90 targeted companies, Ivy Capital, earned an estimated $40 million with this fraud.

Targeting the unemployed

By targeting unemployed individuals, these companies are making a bad situation worse. The unemployment rate is dropping in the United States, but very slowly. Many individuals are taking lower-paying jobs than they previously had, so “real” income is actually dropping, despite the increase in jobs. This essentially jobless recovery is putting further strain on social services facing funding cuts. While legal challenges are shutting these companies down, the likelihood that victims will receive compensation is, unfortunately, low.